November 10, 2011
Coal Project Hits Snag as a Partner Backs Off
Matthew L. Wald
FutureGen, a project first announced in 2003 by President George W. Bush, suffered another setback when the utility partner in the project, Ameren, backed out. Ameren had previously agreed to supply an old oil-fired power plant in Illinois that would be converted to demonstrate carbon-capture technology on a commercial scale. The demonstration project would be designed to burn coal in oxygen instead of ordinary air to produce nearly pure carbon dioxide as an exhaust gas that would then be piped underground for disposal. The project received $1 billion in funding under the American Recovery and Reinvestment Act, the Obama Administration’s $787 billion economic stimulus program adopted in February 2009. This $1 billion in funding, or roughly 80 percent of the project’s costs, is conditioned on the money being spent by the end of 2015, which now seems unlikely. In a previous life (FutureGen 1.0, the project first proposed in the Bush Administration in 2003), the project would have turned coal into a hydrocarbon gas, filtered out the carbon dioxide and burned the hydrogen for power. That iteration of the project was later dumped by the Bush Administration in 2008. Meanwhile, the remaining partners in FutureGen 2.0, Babcock & Wilcox and Air Liquide, could still proceed with the project if they buy the plant and convert it without Ameren, which plans to shut down the plant by the end of the year.
As previously observed in this blog, The Absence of an Economic Case for CCS, the absence of a national policy on reductions in carbon emissions has doomed yet another demonstration project that would have tested a critical technology necessary to address climate change. This comes on the heels of the announcement in July that American Electric Power was abandoning its plan to build a full-scale carbon capture and sequestration (CCS) facility at its Mountaineer plant in West Virginia. In the case of FutureGen, even with the promise of $1 billion in federal assistance in hand, the numbers simply don’t work for an investor-owned utility, Ameren, to remain involved in the project. Without a “price” on carbon, either through a cap-and-trade program for greenhouse gases or a carbon tax, there is no economic incentive to make the necessary investment in this technology, even with taxpayers picking up 80 percent of the cost.